Do you know why they call it personal finance they call the personal finance
because every single person honors financial needs and aspirations are
different some people can live off a very small salary and be happy while
others need to make $200,000 a year to support their standard of living some
individuals love the safety that bond investing provides while others enjoy
the steady cash flow that real estate investing gives them in short personal
finance gain this name because it truly is personal to your own situation
however with that being said there are some general financial concepts that
everyone should abide by and in this video I will share with you six actions
you can take to be good with your money and if you're new to the channel then
hit the subscribe button below for more life-changing content just about anyone
and they will tell you that they are good with their money it's a phrase we
throw around all the time and well it sounds good to the ear what does it
really mean does it mean that you are debt free and have a fully funded
retirement account or does it mean that you made the minimum payments on your
credit card balances last month being good with your money is like saying you
are healthy do you define being healthy as counting calories and exercising five
times a week or being an elite level athlete when it comes to your finances
you can't leave your success up to interpretation
as a result here are six things that in my eyes make you good with your money
number one having a fully funded emergency fund when it comes to saving
money Americans aren't exactly leading the way recent results show that 62% of
Americans have less than $1,000 in savings and another 21% don't have a
savings account at all now I will be the first to admit that saving money isn't
the holy grail of becoming good with your money in fact keeping a large sum
of money in the bank has quite a few drawbacks first most bank accounts offer
very little interest meaning that sticking thousands of
dollars in a low yielding account isn't a step in the right direction when
trying to grow your wealth second banks are becoming more aggressive in the fees
they charge their users things like low balance fees overdraft fees and account
closure fees disproportionately hurt people who don't have much money to
begin with making it much harder for them to save but besides the
pitfalls of stashing money in the bank for a rainy day
many Americans simply do not have the cash to be able to grow their emergency
fund between high cost of living and debt repayments having cash at the end
of the month to feed an emergency account is simply not a reality for
millions of Americans nevertheless having an emergency fund is a core
component of your financial well-being in life uncertainty is certain and
having money set aside to tackle these unanticipated events is important in my
eyes having money stashed aside offers two primary benefits first it allows you
to feel less financial stress as you know you can afford to cover any
unforeseen bill or cost second it allows you to tackle life's unexpected events
and not have to pull money out of your investments or sell off a rental
property which will allow you to maintain your financial progress
number two you take advantage of free money whether you realize it or not
there's a lot of free money out in the world for the taking and no I'm not
talking about the $20 your grandma gives you when you visit I'm talking about
bigger sums of money that if you were truly good with your money you will know
how to take advantage of a prime example of free money is an Employee Retirement
match this usually comes in the form of a 401k employer match where your
employer will contribute up to a certain percentage of your salary based on your
own contribution to the fund let's say you have a generous employer who will
match up to 5% of your total salary for every dollar you personally invest into
the 401k if you weren't a hundred thousand
dollars then your employer is essentially funding your investment
portfolio with an extra $5,000 a year who would turn down an extra $5,000
right well apparently a lot of people a recent study found that one in four
American employees whose employers offer a retirement match we're passing up
roughly twenty four billion dollars in employer contributions that's a lot of
extra money you should at the very least be contributing enough money into your
company's pre-tax retirement account 401k 403 B etc to get the company much
another way to take advantage of free money pertains to academics every year
students across the world show thousands of dollars for tuition with the majority
of them taking loans are pulling from their savings
account to do it sadly the thought to search for scholarships doesn't cross
the minds of most students which means passing on an opportunity to have part
or all their tuition paid for in short being good with your money should also
include knowing how to take advantage of free cash that's available to you number
three you save up for your purchases as of September 2019 the average u.s.
household carried six thousand eight hundred and forty nine dollars worth of
credit card debt and this debt balance cost them more than a thousand dollars a
year in interest payments I'm sure you could find a thousand better ways to
spend your money than on interest payments and while this isn't the
preferred use of money for most Americans they only have themselves to
blame for being in this unfortunate financial situation you see numerous
people struggle with their need for instant gratification this desire for
instant pleasure has been fostered by the world of connectivity and social
media we live in today likes on social ops and Next Day Delivery have put us in
a position where our patience is low and our need for the next hit of endorphins
is high unfortunately many individuals cannot resist the temptation to spend
and because they don't have that cash on hand to fund their purchases they resort
to putting everything on credit personally when it comes to spending
money I always follow this sequence of events before going through with the
transaction first identify the item I want and let's say that's a new shirt
next I set a time for him that I will use to decide whether I really need that
item or shirt in this case I typically choose 30 days or longer if it's a
bigger purchase after 30 days if I still want the item I will calculate its costs
after tax and ensure I have at least set much money in my bank to cover its cost
if I do then I go ahead with the purchase quite honestly 95% of the time
I don't even want the item after the 30 days had elapsed but if I do I always
feel better about my purchase knowing I earned it by saving up the money
number 4 think value not price a few years ago my uncle came to visit and
being a financial adviser he loves to ask me about my finances and spending
habits being the frugal accountant that I am I told him that I try and buy
things for as cheap as possible in order to save up money that I can use to
invest well he appreciated my thoughts around saving
he also bestowed upon me a very important lesson about money he said
that while price is important value is the ultimate marker of quality at first
I didn't really know what he meant but over the years I have come to understand
this idea in essence in life you get what you pay for this lesson came full
circle when I was just starting my career and was buying a whole bunch of
clothes for work I had a suit and dress shoes and wanted to top off my luck with
a watch so being a frugal accountant that I am I went out and bought a cheap
fifty dollar watch at the time the watch looked great and worked great as well
however after about two months to watch stopped working and I was back at the
store looking for a new one now maybe he was just bad luck but it went through
about three cheap watches before my uncle's advice resonated with me I
decided that perhaps investing money into a better watch would be the smarter
financial choice so the next weekend I went out and bought a nice $200 Scogin
watch and as I make this video five years later I am still wearing this
watch on a daily basis the point I'm trying to make is that you should be
looking for value and things you buy and in investments you make regardless of
whether it's stocks or watches value means the best quality for the lowest
price value isn't always the cheapest option but it's also usually not the
most expensive value is something you have to determine for yourself but my
advice is to get the absolute best quality you can for what you're willing
to spend once you start doing this you will be much closer to being someone
who's good with their money number five focus your finances on appreciation if
you're spending a large portion of your money on things like cars clothes and
other tangible items that don't increase in value after you buy them then I hate
to break it to you but you're probably not good with your money buying a new
car is a great example sure it might be mint condition fully loaded and have
everything you want but it'll never be worth what you pay it in fact it may not
have been worth that when you bought it and as you continue to drive it it's
value will only further decrease now don't get me wrong
less requires you to buy items that aren't appreciable like the example of a
car but there is a right way and a wrong way to buy these things in the example
of a car you should instead be looking at low mileage used cars and paying
cash this way you avoid paying for the novelty costs that's factored into the
price of a new vehicle and by paying cash you can avoid interest fee is that
people who finance are subjected to beyond these items you should be putting
your money into things that increase in value or more technical terms appreciate
this can come in the form of financial instruments like stocks or bonds or
tangible assets like commercial or residential property by making
investments in items that grow in value you can make your money work for you
rather than having your nine to five grind be the only way you were in an
income number six you can separate fact from fiction this is either the easiest
or the hardest thing for people to do and when it comes to money a good
decision to one person may be an evident mistake to another in terms of financial
decisions many factors are at play like how you were raised the financial
position you currently find yourself in and what financial aspirations you have
for the future now I don't know your specific money in life position but the
best advice I can give you is when you're looking to buy something invest
in something or do anything at all with your money keep this in mind if there's
any doubt in your mind that what you're about to do with your money is too good
to be true then err on the side of caution and pull back no investment is
all upside even these safest investments like leaving money in the bank or buying
government bonds comes with some risk so use your best financial judgment when
trying to separate a good deal from a scam by keeping this advice in mind you
will be sure to ever in the title of someone who is good with their money
thanks for watching if you want to go from the life you have to the life you
deserve then hit the subscribe button now